Get Rich Realistically

Professional Mariner Forum
#32

Every mutual fund I own can be liquidated at the end of the next business day (I use eTrade, I’m sure the other big online brokers are the same).

RMDs are not applicable to Roth IRAs. Yet another advantage to the Roth.

Agree with this. All I am advocating is that it’s wasteful to have this large sum of money sitting in cash on the sidelines earning negligible interest for something that MIGHT happen (the emergency where you lose your job for 6 months to a year). This is especially true for someone just starting their savings plan because, as you said:

#33

Yeah I’ve been reading up on REIT funds and that actually appeals to me for sure. Real Estate is dicey where I live (bubble is gonna burst).

#34

I am absolutely in to doing most of the work myself on renovating a little shit hole and renting it out - we did manage to find some fairly cheep places in northern cali (believe it or not) but I am terrified of owning and renting out anything in California. It would be a decent investment though - cheap housing is hard to find there and the little places I’ve seen (and one I fixed up a bit and sold for a really nice profit) are certainly affordable - But I don’t live there so eek

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#35

If you can only afford one there’s a good argument for your emergency fund being in a Roth IRA but when you’re most likely to need it (when the job market is down) the IRA is also likely to be negative, which is a very bad time to sell.

BTW, there are good online only savings accounts out there that make a guaranteed 2.20% APR, I use Barclay’s Bank but there are a few other equivalent ones.

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#36

Having an emergency fund does more than give a comfortable piece of mind it also helps you avoid credit card & other types of finance charges. When our daughter needed braces, the transmission went out on my truck & a death in the family involved making an international flight reservation we just paid them & continued putting the same amount of money into the emergency fund each pay period. If a person has an emergency fund then they can become their own credit card/lending company. Instead of paying 3-10% to borrow money you can earn 2-3% by having money in CD’s or a money market.

Also, we plan on using our emergency fund as a buffer account in retirement. All the financial books I read & podcast I listened to said the same thing, in retirement, timing is everything. If a person retires in a bad economy or gets a few straight years of bad returns at the beginning of their retirement it can ruin a person’s life savings. Instead of using the 4% rule in retirement or waiting every month/quarter for our dividends to deposit we will pull the same small fixed amount out of our emergency fund & have our retirement accounts returns deposited directly into our emergency fund. If we pull out 3-4% & our returns are 3-7% then hopefully we should never have to touch our principal. Larger the cash buffer account, less influence a negative market will have on our retirement.

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#37

I’m in the downhill slide toward retirement in five years. My five year plan.

Eliminating credit card debt is a big priority. Interest and fees really snatch a lot of your hard earned money.

#38

Credit cards are very useful if used properly. Interest for a month or two between jobs is no problem. But as soon as cash starts flowing in pay the cards to zero immediately.

It makes more sense to be fully invested and use credit cards as an emergency fund, as long as your emergencies are not too frequent.

#39

or long…
With mariners it seems we lose employment when the economy goes down due to recession, trade wars or oil price declines. Not coincidentally invested capital declines at the same time. Bad time to remove money from investments. Credit card interest is ridiculously high compared to what the banks pay for the money and can leave one in debt longer than it takes investments and income to recover. There is nothing wrong with having 6 months or a years cash stashed away in a credit union or some other insured depository. No FDIC insured money has ever been lost.

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#40

That’s nice in theroy but in your 20’s your just starting out and don’t make crap for wages along with most people start families around then planned or otherwise

#41

I’m glad you brought up that reality. For a young mariner starting out and thinking about funding a retirement on 401k and social security benefits, the best investment they can make is living in an affordable part of the country, rather than the pricey major metropolitan centers. If your company has liberal travel benefits, making your home in or near SF or LA or Seattle can be a mistake. It means money will be tight for you, perhaps for the first 20 years of your career, because of a maxed-out mortgage.

Our boats dock in Seattle, but most of the mariners live in Montana, Wyoming, and as far as Maine. Their houses appreciate, maybe not so fast as they do in Seattle, but enough they’ll make a tidy profit when they sell them years down the road. Meanwhile they can afford to invest in the 401k with a 37% match. The few guys living in the Seattle area often can’t afford the mortgage AND max out on 401k. Finances are too tight.

On top of all the other good investment advice here, one bit is: live in Lawrence, Kansas.

2 Likes
#42

Credit Unions are the best place to get a credit card. Interest rates are quite reasonable, less than half what the banks charge.

If you have high interest credit card debt, try to refinance it with a balance transfer to a new credit union card.

The biggest use of funds from P2P (Peer to Peer) lending is refinancing high interest credit card debt. Some might consider refinancing P2P.

The best way to make money is simply to stop spending on things that you don’t really need.

One of the biggest mistakes that a lot of guys make is buying a $60,000 truck that gets 12mpg with high interest dealer financing, and is expensive to register and insure. If you want to make money and get ahead in life, buy a modest new car with good mileage (e.g. Toyota Prius) financed by your credit union, or pay cash for cheap clunkers.

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#43

Not to mention that it sits for ~6 months a year. Plus who is going to haul wood or gravel in that top trim truck?

#44

If everyone went by the 10% rule on vehicle purchases they’d be a lot better off financially. New car dealers would rather not think about such heresy.
10% of your annual net income should be the max you spend on a vehicle. Vehicles are not an investment that appreciate in value most of the time.

#45

I like to buy multiple vehicles worth less than $5,000. Index fund investing but for clapped out cars.

They can’t lose much more value.

They always need some sort of tinkering so you’re never bored

They can be parked out on the front lawn/driveway for any potential buyers to see.

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#46

That mirrors my approach to cars. I don’t pay more than trade in value. I only pay cash. I only buy liability insurance, no full coverage. I look for cars that have some problem that looks bad, but is easy to fix. I prefer to buy trucks that are pre-dented. No point in buying a truck that is too good to put to work

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#47

A mistake that a lot of guys make is budgeting while the overtime is plentiful. When it ends they’re in a world of hurt.

#48

Well most mariners make more than “crap wages” even in thier 20’s. And if starting a family is a priority for someone, go ahead. Doesn’t mean they can’t live debt free and save 15% of thier income.

#49

As they say in every prospectus, “past returns are no guarantee of future results”. There are viable candidates in the running for president that are advocating policies that are very likely to result in major market downside. A trade war also fits this criteria but I can’t believe that it will be allowed to crash the market within a year of the election.

Either way, I’m 75% cash at the moment so that should tell you my confidence in the short term.

#50

GEEZE…This ain’t rocket science. Spend less than you make and invest on a regular schedule. Never be a slave to a house or a vehicle.
My absolute best investment was my divorce lawyer from my first marriage. She’s gone on to destroy 2 other guys lives.
My present wife of 32 years is a regimented saver. We both drew early pension 10 years ago at 56. We’re now drawing S/S. we still haven’t drawn on our portfolios. I guess it’s time for a new flats boat or motor home. Retirement does NOT suck…

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#51

Back in the 90s I was working for a tanker company around the time the company cut the officer’s pay by 28%: deck and engine. The exception being the Masters, whose pay cut was less than 5%. I remember one Captain who lived in Connecticut, in the vicinity of the stockbrokers belt, who was always whining about how he was barely making ends meet. Meanwhile I was the Chief Mate, cleaning tanks and loading and discharging like a S.O.B. for about what I had made as a 2nd Mate but since I lived about 500 miles south of the Captain I had the satisfaction of getting to live like a king at home, due to the lower cost of living! Words to ponder!